Illinois Passes MillerCoors Law

FILED AUGUST 25, 2009

Dear Client:

When it comes to protecting their franchise rights, Illinois wholesalers don't mess around. Illinois Governor Patrick Quinn signed into law today a bill "to assure that the State of Illinois will continue to control the contractual relationship between a beer distributor and a brewer," writes the Associated Beer Distributors of Illinois in a release.

ABDI had initiated the bill as a result of the new MillerCoors distributor agreement last August (can you believe it's been a year?). ABDI felt several provisions in the contract conflicted with Illinois' Beer Industry Fair Dealing Act (BIFDA) and "possibly impairing some rights that beer distributors currently have under the provisions of BIFDA." The bill clarifies "that all brewer/distributor agreements: incorporate state law, are governed by state law, and that state law supersedes all provisions of the agreement," says ABDI.

The legislation was introduced in February "after attempts to resolve differences between MillerCoors and ABDI broke down." ABDI says the bill's introduction started three months of "intense discussions which included both MillerCoors and Anheuser Busch InBev, in an attempt to create a bill that both addressed ABDI's concerns and avoided the issuance of an Illinois specific agreement. ABDI is confident that the crux of the legislation, to assure that all brewers' agreements are governed and are controlled by State law, remained in the legislation. All MillerCoors distributors supported the legislative effort by refusing to execute the new contract until HB 773 became law. In Illinois, legislation cannot impair an existing contract."

Bill Olson, President of ABDI, said: "We believe that HB 773 may be the most comprehensive legislation passed to address the MillerCoors contract and maintaining the rights of distributors."

The bill also maintains the right of distributors to approve or not approve future amendments to the contract, as well as preventing termination due to failing to consent to an amendment. It permits a brewer to amend the agreement, including operating standards, if the amendment does not "materially, substantially, and adversely affect the wholesaler and such amendment is effective as to all wholesalers of the brewer in the State." This would allow brewers to make technical (uniform) amendments. The bill also clarifies that Illinois law prevails over all brewer - wholesaler agreements, as well as other clarifications.

"With the signing of HB 773 into law, distributors who choose to sign the contract after it becomes law will have all of the provisions of HB 773 apply to the agreement," said Bill.

Until tomorrow, Harry

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